Last week was a bit of a watershed for the wheat market, as it grappled with trying to maintain its recent gains, versus giving up and retreating, versus pushing higher.

In the end it stayed in no man's land, with virtually no move in CBOT wheat futures over the previous weekly close, having pushed to a new high at the start of the week.

The drivers that have pushed grain prices to current levels have not gone away. There are still significant planting delays (record delays in fact) in parts of the US corn and soybean belts, and rains are hampering the early winter wheat harvest.

Leading into the past month the market was dominated by the accumulation a large net short (sold) position held by funds punting that wheat would go lower against a new record global crop. It was a similar sentiment for the US corn and soybean markets.

Table 1: Weekly move in wheat prices. Source: Malcolm Bartholomaeus

As problems began to emerge for corn, with a flow over to wheat as wheat became cheap, there was a move to buy back those sold positions, which fed on itself. This process propelled corn and wheat prices higher, and even supported soybeans.

Such buying was always going to come to an end at some stage, only continuing if the funds thought that they should establish a net long (bought position) i.e. punting that grain shortages would send the market even higher.

Last week, when wheat and corn prices hit critical levels, the buying slowed. The market is trying to assess whether there really is an issue that might tighten grain stocks enough to warrant pushing higher.

In the case of wheat, the price rally has been a good one. The market lifted 100 USc/bu over a four-week period. Not only that, it hit the top of the trading range seen since August last year, pushing wheat futures into territory only held for brief periods of time since July 2015.

In fact, there have only been 11 trading weeks since July 2015 where prices have been more than 10 USc/bu higher than we saw last week.

So, it is no wonder that the market stalled during last week. Once again, we need to see some action from elsewhere in the global market to justify futures prices going any higher than they have already been.

Nothing changes. All eyes are now on the Black Sea region, and Russia and Ukraine in particular. Will the dryness starting to impact them continue and make a real difference or not? Dry conditions in Canada and Australia, and parts of Europe will also add to the story but not be the real drivers at this stage.